Sage UK SMB Workforce Pulse - February 2026

The monthly Sage Workforce Pulse is based on data collected each month from approximately 200,000 small businesses with millions of employees across the UK. This report, created in collaboration with Smart Data Foundry and Cebr, looks into how Small and Medium-sized Businesses (SMB) are managing workforce challenges.

Key highlights:

• Median gross earnings: £2,189, up 5.3% year-on-year
• Median take-home pay: £1,778, up 3.8% year-on-year
• Total headcount: Up 0.2% on a year-on-year basis

As quoted in the report:

"Growth is expected to slow in 2026 amid persistent economic headwinds. Cebr forecasts suggest that GDP will expand by around 1.1% this year, though downside risks have intensified following the escalation of conflict in the Middle East. This could dampen activity through higher inflationary pressures and tighter monetary conditions.

In the labour market, the decline in job vacancies appears to have stabilised, though the elevated unemployment rate reflects the continued challenges faced by jobseekers, particularly graduates and entry-level applicants. The gradual softening of the labour market is beginning to weigh on wage growth. However, the increase in the minimum wage in April means that, for SMEs in lower-paid sectors, labour costs are likely to remain a constraint on hiring."

Liam Daly, Senior Economist at Cebr

Insights

Earnings

Median gross earnings rose 5.3% year-on-year in February across the UK, up from 5.1% in January but down from 6.5% in February 2025. Meanwhile median take-home pay (net) stood at £1,778, up 3.8% year-on-year.

London exhibited the lowest earnings growth in February, at 4.3%, while earnings increased at the fastest annual rate in Wales, rising by 6.1%. Year-on-year changes in earnings growth varied more by industry than location. Earnings growth was highest in the ‘information and communication sector’, rising 7.7% year-on-year, and lowest in the ‘arts and entertainment industry’, with annual growth of 0.8% year-on-year.

Headcount

In February, headcount among the sample of small businesses rose by 0.2% year-on-year, consistent with the growth in January 2026.

The South East, East Midlands and West Midlands registered the greatest year-on-year increases, at 0.8%, 0.8%, and 0.5%, respectively. Meanwhile, the sample of small businesses located in London, Scotland and the South West registered the greatest declines, with headcount falling by 0.4%, 0.3% and 0.2%, respectively.

Year-on-year changes in headcount varied widely by industry. Similar to January and December’s results, ‘Accommodation and food services’ experienced the largest drop of 1.2%, while in ‘public administration and defence’ headcount grew by 4.2%.

Headcount growth was highest among micro (XS) businesses, which registered an increase of 0.3%. While headcount increased by 0.1% among small (S) enterprises and remained unchanged for medium (M) enterprises at 0.0%.